Real Estate and Parental Responsibility
I have taken a very informal survey of brokers over the last couple of weeks to check up on their opinion of the current market. Pretty informal, because I just asked them. Most of them replied that they are having the best year in quite some time. This flies in the face of a "real estate bust" or "housing recession", right?? Well, not really and here's why.
Real estate corrections or whatever you choose to call the phenomenon we are currently experiencing are all about, if you'll excuse the cliche, "getting back to basics". Whenever demand exceeds supply or supply exceeds demand in a truly egregious way, the market, for lack of a more scientific term, gets out of whack. When demand exceeds supply, it's like a child who has gone to the fair all day, eaten a bunch of sugar-filled junk food, been allowed to run around a place where there's a lot of noise and bright lights. Anyone who has children knows that somewhere between the ride home and bedtime, an adjustment in behavior will have to take place.
On the other hand, when supply exceeds demand, the market behaves like the same child who finally is convinced that the fun is over, i.e. sulky, whiny, given to wild overstatement. "I NEVER get to have any fun!" or "I ALWAYS have to go to bed too early." But, usually by the morning, after a good night's sleep, all is forgotten and life goes on.
So goes the market place. When it is overexcited, it has to be corrected. When the correction is given, it becomes sulky and disappointed. But a new day always comes around. The market, like the over-excited or sulky child, has to be brought back to the basics. The basics are simple and haven't changed very much over the years, some to the point that they are cliche.
1. Location, location, location. This is still the most important factor in real estate, for the same historical reason. You can change every thing about a property; you can build a new building, tear one down, add on or renovate, change zoning or usage, and on and on - BUT - you can't change where it is. Believe me - don't try.
2. Properly priced properties sell. The seller doesn't decide what a property is worth. THE BUYER DOES. If the price is too high, they won't even look, confirming the worst fears of "recession" and "slump". But it's not the economy, it's the price! When the price is right, the buyers will come.
3. They're not making any more of it. - This is why over the longer term, through the cycles of exuberance and despair, real estate continues to appreciate relative to the rest of the economy. There is a finite supply and a not so finite demand.
Sooooooooo - cheer up!. Get a metaphorical good night's sleep and the market will have perked up before you know it. Just don't lose sight of the basics.
Real estate corrections or whatever you choose to call the phenomenon we are currently experiencing are all about, if you'll excuse the cliche, "getting back to basics". Whenever demand exceeds supply or supply exceeds demand in a truly egregious way, the market, for lack of a more scientific term, gets out of whack. When demand exceeds supply, it's like a child who has gone to the fair all day, eaten a bunch of sugar-filled junk food, been allowed to run around a place where there's a lot of noise and bright lights. Anyone who has children knows that somewhere between the ride home and bedtime, an adjustment in behavior will have to take place.
On the other hand, when supply exceeds demand, the market behaves like the same child who finally is convinced that the fun is over, i.e. sulky, whiny, given to wild overstatement. "I NEVER get to have any fun!" or "I ALWAYS have to go to bed too early." But, usually by the morning, after a good night's sleep, all is forgotten and life goes on.
So goes the market place. When it is overexcited, it has to be corrected. When the correction is given, it becomes sulky and disappointed. But a new day always comes around. The market, like the over-excited or sulky child, has to be brought back to the basics. The basics are simple and haven't changed very much over the years, some to the point that they are cliche.
1. Location, location, location. This is still the most important factor in real estate, for the same historical reason. You can change every thing about a property; you can build a new building, tear one down, add on or renovate, change zoning or usage, and on and on - BUT - you can't change where it is. Believe me - don't try.
2. Properly priced properties sell. The seller doesn't decide what a property is worth. THE BUYER DOES. If the price is too high, they won't even look, confirming the worst fears of "recession" and "slump". But it's not the economy, it's the price! When the price is right, the buyers will come.
3. They're not making any more of it. - This is why over the longer term, through the cycles of exuberance and despair, real estate continues to appreciate relative to the rest of the economy. There is a finite supply and a not so finite demand.
Sooooooooo - cheer up!. Get a metaphorical good night's sleep and the market will have perked up before you know it. Just don't lose sight of the basics.
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